Archive for November, 2012

Greeks will be called to pay one billion euro more on taxes with the new taxation system according to new taxation draft prepared by the Troika. Self-employed will pay taxes from the very first euro of revenues, while one million low-pensioners and employees will be exempted from tax (annual income apparently 9,000 euro).

The most crazy taxation scheme wants employees with over 48,000 euro income paying 45% taxes, while self-employed with pay 35% for income of over 50,000 euro.

*KTG understands there must be another category for incomes 9,0001-18,000 euro, otherwise it’s crazy to ask people with 10,000 income to pay 21% tax!

Taxpayers will see many of tax-free deductions to disappear as they will be scrapped. Only 10% tax deduction for medical expenses and alimony will remain.

Lucky are expected to be those with annual income less than 9,000 euro, as they will most likely pay no tax. It looks as the tax-free cap for employees and pensioners to be raised again from 5,000 to 9,000 euro.

Those with the average annual income of a Greek family, i.e. 25,000 euro, will have to pay much more taxes than today:

Tax Reductions

Up to 18,000 euro income will enjoy tax exemption fo 1,950 euro ( I assume by providing receipts).

18,000-29,000 tax exemption is reduced by 50 euro for every 1,000 euro of income.

•A simplification of the personal income tax with three rate bands instead of the current eight rates with an enhanced tax credit. Through these reforms, some one million wage and salary earners and pensioners will be taken out of the personal income tax.

•The conversion of personal tax allowances for children into means-tested benefits.

•The introduction of a new integrated tax regime for the self-employed and professionals with an initial tax rate of 26% rising to 35% after €50,000 and with no personal tax allowance.

•A restructured tax regime for corporate profits with a corporate tax rate of 26% and a tax on distributed dividends of 10%, resulting in a gross tax rate on distributed profits of 33.4% (instead of former tax rates of 20% and 25% respectively resulting in a gross tax rate of 40%).

•The elimination of special tax regimes based on imputed income, such as those currently in place for farmers and seamen.

Full Troika Draft Report including all austerity measures and state expenditure cuts here.

The generous but hardly to believe it will happen move was published on yellow press BILD newspaper, citing a German government source.

Germany wants to bundle three tranches of aid to Greece into one payment of more than 44 billion euros, German newspaper Bild said on Tuesday, citing German government sources.

A German finance ministry spokeswoman, asked to comment on the Bild report, said no final decision had yet been made on next loan payments to Greece.

Bild said the payment would comprise the 31.3 billion euros dating from the second quarter that Greece hopes to receive soon to avert bankruptcy along with further tranches of 5 billion euros and 8.3 billion euros for the third and fourth quarters. (REUTERS)

I can’t resist to think about some mean tricks labelled as “terms & conditions” for Germany to approve such a generous move.

On first thought, I would think of an escrow account were all this money will be deposited. Under German supervision, of course. And a nice profit for Berlin via the interest rates.

On second thought, I could think of Wolfgang Schaeuble considering to ask additional austerity measures and thus as soon as possible: he would deprive my parents of their pensions and medical care, cut off any prescription medicine, get my children to work full-time for 250 euro per month.

Is Schaueble really that mean? I don’t know, but I wouldn’t be surprised if he would trade the ’44 billion euro’ to serve best German interests. Otherwise, why would he do that?

Meanwhile, high-ranking official at the Greek finance ministry without clearly confirming the claims, said:

“We are still stuggling, th eissue is not over yet, there are toguht negotiations, therefore nothing should be considered as given.” (capital)

On Monday in Brussels and at the margins of Eurogroup meeting, Wolfgang Schaeuble said:

“Tthere was no talk at the Eurogroup meeting of boosting the level of aid to Greece, but he indicated that there was room to help Athens by adjusting interest rates and debt maturities.” (MNI)

International media are still puzzled as to whether such a generosity from the German side was possible.

PS If Mercury weren’t retrograde, I would say “Nice joke. You know the one with …”

A day after the Eurogroup meeting, Greek Prime Minister Antonis Samaras will meet EU Commission President Jose Barroso and EU Council President Herman Van Rompuy in Brussels today. The meetings are scheduled for after 1 p.m. on Tuesday.

Samaras is expected to raise the issue of the disbursement of the 31.5 billion euro bailout tranche and seek an immediate solution to the problem.

According to in.gr, Samaras will also raise the issue of the tranches due last September and upcoming November totalling 13 billion euro.

The 31.5-billion-euro tranche was due last July/August, however the whole process of ‘structural reforms, spending cuts and bailout aid’ was delays due to parliament elections that took place in May and June.

The Eurogroup finance ministers agreed to give the “green light” for the two-year extension of the Greek fiscal program, but important decisions on the Greek debt crisis, including the disbursement of the tranche, have been postponed for November 20th 2012.

On Monday night, after the Eurogroup meeting, Greek finance minister Yiannis Stournaras told reporters, that the disbursement of the tranche will be due after November 26th.

According to Stournaras, the timetable for the tranche release looks like that:

Troika report will be completed on Nov 17th

Eurogroup finance ministers will approved it on Nov 20th

EZ/EU member-states parliaments will vote for the new Greek aid

The “green light” for the tranche will be turned on on Nov 26th during a Eurogroup meeting either per teleconference or via physical presence

The eurogroup meeting ended on Monday night with no green light for Greece to receive the much anticipated 31.5 billion euro bailout tranche. Euro zone finance minister and IMF officials meet to discuss the Greek debt crisis and find what Christine Lagarde described as a ‘real solution for Greece’.

Stournaras kisses Juncker

EZ finance ministers agreed to give Greece a two-year extension of the bailout program to meet fiscal tagets. This extension will make additional aid of 30 billion euro necessary. EZ, ECB and IMF officials, the Troika, could not find the solution as who will pay this financial gap.

The final decision on the disbursement of Greek bailout tranche and the method to make the country’s debt sustainable are postponed for November 20th 2012.

Eurogroup chief Jean-Claude Juncker and European Monetary and Economic Affairs Commissioner Olli Rehn praised the Greek government for passing the latest package of fiscal and structural reforms but International Monetary Fund managing director Christine Lagarde suggested that some “chapters” remain to be settled.

“The Eurogroup welcomes efforts by Greek authorities to bring program back on track,” said Juncker. “The Eurogroup acknowledges the considerable efforts of the Greek citizens.”

“All those who openly dismiss the potential of the Greek program to return fiscal sustainability should dwell on the improvement in the country’s structural budget balance,” said Rehn. (read more ekathimerini)

Monday’s eurogroup meeting must have been one of the difficult kinds with EZ and IMF officials and Germans apparently having grave differences on certain issues.

Stournaras and Lagarde

Earlier on Monday evening, some Greek media reported of an adamant Germany insisting of pushing its own terms and conditions and thus despite resistance from the IMF. With Greece being stuck among the two of them and at risk of being crushed.

Germany reportedly was firmly against reductions of interest rates cuts for the money already paid to Greece. The IMF considers it as imperative in order to give a breath to Athens.

Beyond that, Germany went even a step further, thus challenging the Greek common sense: Berlin – or better say Finance Minister Wolfgang Schaeuble, wanted a strict supervision of the Greeks that they would carry out the reforms.

Greek FinMin & the IMF

Meanwhile as parts of the Troika report were published on Greek press it looks as if additional austerity measures of 6.4 billion euro will be needed for 2015-2016. This news must be a shock for Greeks who will get face to face with 13 billion euro austerity 2013-2014.

the relevant austerity bill was voted last Wednesday at the Greek Parliament with Prime Minister Antonis Samaras assuring coalition government lawmakers and the public that “these are the last austerity measures.” But maybe he meant, the last austerity measures this government will take.

Recently Samaras had also said that the country had money until November 16th, i.e. upcoming Friday, and therefore the austerity bill and the Budget 2013 should be adopted by the government in order to receive the bailout tranche.

Samaras will meet with EC President Barroso on Tuesday morning.

Will Greece go bankrupt next Friday without the bailout tranche?

EU Commissioner Olli Rehn insisted that there would be no problems on Friday, when Greece has to rollover 5 billion euros of debt. It is planning to do so by issuing T-bills and Rehn said Greek banks would be in a position to buy them even if they are cut off from the Eurosystem.

PS and I thought Greece had no money to pay wages and pensions. But it was only for 5-billion-euro rollover of debt. Phew!

German Chancellor Angela Merkel said during her first official visit to Portugal on Monday that Lisbon’s austerity measures were laying the foundation for future economic growth.

“I feel a great determination to master this difficult phase,” the chancellor said after meeting Portuguese Prime Minister Pedro Passos Coelho, while rejecting accusations by Portuguese critics that she was the architect of austerity policies seen as impoverishing the country.

“This is not a program that has been invented by Germany or any other country,” Merkel said.

Merkel, however, conceded that while she believed the spending cuts and structural reforms implemented by Portugal would benefit the country in the long-run, the measures have spelled hardship for the population.

Protests were a part of democracy, the chancellor said, in a reference to constant rallies faced by Passos Coelho in recent months. However, they should not prevent politicians from doing what was necessary, she added.

Hundreds of people demonstrated against the chancellor’s visit, displaying slogans such as “Merkel out of here”.

Protesters gathering outside the presidential palace demanded “the right to work and to be valued.”

The demonstrators included artists and far-left politicians.

Protesters tore down protective fences and displayed a Hitler-like doll outside a building where Merkel was due to meet with entrepreneurs, but no clashes were reported.

Many people working at offices, schools or factories wore black to “mourn” Merkel’s presence. The chancellor represented “a policy of a massacre of the poor,” said Joao Camargo from one of the protest groups.

Portugal entered the Troika bailout mechanism in 2011 and imposed strict austerity program against 100 billion euro. (Full story here)

It looks as if there is a thriller going on in Brussels, during the Eurogroup meeting on Greece. Some Greek media report of an adamant Germany insists of pushing its own terms and conditions and thus despite resistance from the IMF. With Greece being stuck among the two of them and at risk of being crushed.

Germany reportedly is firmly against a reductions of interest rates cuts for the money already paid to Greece. The IMF considers it as imperative in order to give a breath to Athens.

Beyond that, Germany goes even a step further, thus challenging the Greek common sense: Berlin – or better say Finance Minister Wolfgang Schaeuble, wants a strict supervision of the Greeks that they will carry out the reforms.

Details of how this “strict supervision” will be imposed in real Greek life have not reached Athens yet. At least, not the media.

Meanwhile Dutch Finance Minister said that the Eurogroup may meet again this week on Greece.

Obviously adopting a fatalistic approach to the delayed bailout tranche, Greek Prime Minister Antonis Samaras, sent a message to Eurogroup partners, the EU and the IMF:

“We as Greece did what we had to do, the issue will be resolved between those who have the problem, ” Samaras told reporters after a marathon meeting he had with several ministers.

He declared confident that “we will have a very positive development in terms of the tranche release” and commented:

“I do care what money the country will receive, how the banks will irrigate the economy with liquidity, how the state will repay its outstanding debt [to private persons] and how businesses will stop from bankruptcy because the state is not honest.”

KTG had a longer server downtime on Monday afternoon. The 3-hour downtime was one of the many challenges broke citizens of Greece experience from time to time. Server has been restarted several times, but it seems it is exposed to a very windy internet area, because it goes up and down, even after we fixed the problem.

Of course, a broke citizen and a broken server is not a healthy relationship, especially when the nerves of the citizens are already worn out nerves. And patience has exhausted all its limits.

Nevertheless, after several other issues that had to be fixed are solved, it looks like KTG will relocate into a more comfortable server seat – tonight, 8:30 local time. The process will take a couple of hours.

Therefore, it might be possible that you will not see keeptalkinggreece.com for several hours, but you don’t see it anyway…

We pick up the glove and enter a fierce duel with servers and technic.

Plans to give Greece extra time to meet deficit-cutting targets would open up a financing gap of around 15 billion euros ($19 billion) through 2014 and 17.6 billion euros in the two following years, the country’s creditors said.

The “troika” of the European Commission, European Central Bank and International Monetary Fund supplied the estimates for tonight’s meeting of euro-area finance ministers in Brussels, according to a document obtained by Bloomberg News.

The report gave a mixed assessment of Greece’s progress from debt to recovery, saluting Prime Minister Antonis Samaras’s coalition for “a significant catching-up” while saying that “risks to the program remain very large.”

The 115-page draft didn’t include proposals for plugging the financing hole and two critical sections — on Greece’s debt sustainability and recommendations for next steps in the three- year effort to turn the country around — were left blank.

The report assumed that Greece will succeed in getting two additional years, until 2016, to meet fiscal targets. Estimates of the financing gap were in brackets, indicating that they could change before European governments complete work on the Greek rescue package.

Options floated for filling the gap include cutting the interest rates and extending the maturities on Greece’s aid loans, paying out loans on a faster schedule and engineering a buyback of Greek debt. (via Capital.gr)